The equity market traded higher on Tuesday as investors extended the previous session’s rally after the State Bank of Pakistan (SBP) held the policy rate unchanged, while falling global oil prices and optimism over a US-Iran interim peace deal further lifted sentiment.
During the session, Pakistan Stock Exchange’s benchmark KSE-100 Index climbed to an intraday high of 179,986.90, gaining 2,947.08 points, or 1.66%, before retreating to a low of 177,741.46, reflecting an increase of 701.64 points, or 0.4%.
“Stocks trading bullish after SBP status quo in the policy announcement yesterday, owing to expected low inflation and US-Iran interim peace deal,” said Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities.
“The slump in global crude prices and surging global equities played a catalyst role in bullish activity at the PSX,” he added.
The State Bank of Pakistan left its key interest rate unchanged at 11.5% on Monday, as policymakers assessed the impact of the Middle East conflict on inflation and growth.
“The committee noted that global oil prices have eased following the recent positive geopolitical developments, yet they remain elevated as compared to pre-conflict levels,” the central bank said after its Monetary Policy Committee meeting.
The SBP said the impact of the conflict was now being reflected in recent economic indicators, with headline inflation rising to double digits in April and May and core inflation also edging up.
The MPC noted that headline inflation increased from 7.3% in March to 10.9% in April and 11.7% in May, reflecting the direct impact of higher domestic energy prices linked to the Middle East conflict and indirect effects through transportation and production costs.
The development contributed to an increase in core inflation to 8.2% in April and 8.7% in May, the central bank added.
The MPC projected inflation to remain in double digits for the next few months before gradually easing.
“This outlook is subject to multiple risks, including geopolitical developments, the extent of pass-through of global prices to domestic fuel prices, magnitude of adjustments in power and gas tariffs, potential fiscal slippages, and uncertain food prices amidst weather-related challenges,” it said.
The Pakistan Stock Brokers Association (PSBA) has called Budget FY27 a “balanced and investor-friendly package” that supports economic growth and the development of the capital market.
In a statement issued on Monday, the association said several budget measures were in line with its recommendations for strengthening the stock market and boosting investor confidence.
The PSBA particularly praised the government’s decision to retain the existing tax regime for the stock market and avoid imposing any new taxes on investors, saying the move had removed uncertainty created by market speculation about possible additional fiscal measures.